Deficiencies in internal controls and trader oversight at The Goldman Sachs Group, Inc., landed the firm a cease-and-desist order and $54.75 million civil money penalty (CMP) from the Federal Reserve Board (Fed), which coordinated its action with the New York State Department of Financial Services.
In the May 1 order, the Fed cited the company for unsafe and unsound practices in its foreign exchange (FX) trading business.
The Board levied the fine for deficiencies in Goldman’s internal controls and oversight of traders who buy and sell U.S. dollars and foreign currencies for the firm’s own accounts and for customers. It said Goldman:
- failed to detect and address its traders’ use of electronic chatrooms to communicate with competitors about trading positions, including around benchmark fixes; and
- failed to detect and address the disclosure of confidential client information.
The order requires Goldman to improve its controls and compliance risk management for the firm’s FX trading.